Minnesotans May Sue if a Debt Collector Levies Funds in a Joint Account

Back in November, I won an important decision for Minnesota consumers against Messerli & Kramer, a law firm that seems to handle the bulk of debt collection lawsuits filed in Minnesota. Messerli & Kramer served a levy on my clients’ bank for funds in their’ joint bank account, even though Messerli & Kramer only had a judgment against one of them. The other had no connection to the debt.

This happens all the time, and not just to husband-and-wife joint accounts.

The American Bankers Association has said that the majority of accounts into which federal benefits (social security, for example) are deposited, are joint accounts. Those benefits are exempt from garnishment or levy, but are still often taken if a joint account holder (usually a family member, often a child) is garnished for a debt.

The states have a hodgepodge of rules that govern money held in joint accounts, but Minnesota has adopted the Multi-Party Accounts Act, under which the person who deposited the funds, owns the funds. In order to garnish or levy funds in a joint account, a creditor must first prove who owns those funds. This only makes sense; you do not get to take Joe’s money to pay Jimmy’s debt.

Plus, the joint account holder (the non-debtor) often has no notice of the lawsuit before their money is taken. Due process would seem to require something more than zero notice.

The case is not over yet. We won the right to sue from one judge; now, we have to win the case, and Messerli & Kramer is apparently planning a long, drawn-out fight.

Obviously, this case does not apply to other states, where debt collectors may be allowed to attach funds in a joint account due to that state’s laws.

Sam Glover is a lawyer and the founder and Editor in Chief of Lawyerist.com. He also works with lawyers on motion practice and appeals, and is President of the board of directors of HOME Line, a nonprofit Minnesota tenant advocacy organization.